DCIT- 5(2)(1), MUMBAI V. IORA DIAMONDS PVT. LTD., MUMBAI

ITA 5617/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6578 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR PADMAPANI BORA
• Keywords: Bogus purchase
• Section: 5(2); 132

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI C. N. PRASAD, JM & SHRI M. BALAGANESH, AM ./ I.T.A. NO . 5617, 5618 & 5853 /MUM/2018 ( / ASSESSMENT YEAR: 2008 - 09 TO 2010 - 11 ) M/S IORA DIAMONDS PVT. LTD. EC3010, BH ARAT DIAMOND BOURSE , BANDRA KURLA COMPLEX, BANDRA (E) , MUMBAI - 400 051 . / VS. D CIT CIRCLE 5(2) (1) , ROOM NO. 571, AAYA KAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 ./ ./ PAN NO. A ABCI7082G ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI KUMAR PADMAPANI BORA, DR. / RESPONDENTBY : NONE / DATE OF HEARING : 06.02.2020 / DATE OF PRONOUNCEMENT : 10.02.2020 / O R D E R PER M. BALAGANESH (ACCOUNTANT MEMBER) : THE PRESENT THREE (3 ) A PPEAL S HAVE BEEN FILED BY THE REVENUE AGAINST THE ORDER OF LD. COMMIS S IONER OF INCOME TAX 2 I.T.A. NO. 5617, 5618 & 5853/MUM/2018 M/S IORA DIAMONDS PVT. LTD. (APPEALS) - 10 , MUMBAI, IN SHORT LD. CIT(A) DATED 29.06.2018 FOR AY 2008 - 09 TO 2010 - 11 RESPECTIVE LY. 2. SINC E THE ISSUES RAISED IN ALL THE APPEALS ARE IDENTICAL, THEREFORE, FOR TH E SAKE OF CONVENIENCE, THESE APPEALS ARE CLUBBED, HEARD AND DISPOSED OF F BY THIS CONSOLIDATED ORDE R. 3 . AT THE OUTSET, IT IS NOTICED THAT NO NE APPEARED ON BEHALF OF ASSESSEE AND NO APPLICATION FOR ADJOURNMENT WAS MOVED ON BEHALF OF THE ASSESSEE . THEREFORE , WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE WITH THE ASSISTANCE OF THE L D. DR AND BASED ON THE MATERIAL S PLACED ON RECORD. 4 . THE ONLY EFFECTIVE ISSUE RAISED BY THE REVENUE IS THAT WHETHER THE LD. CIT(A) WAS JUSTIFIED IN REDUCING THE PROFIT ELEMENT TO 8% AS AGAINST 12.5% ON ALLEGED BOGUS PURCHASES MADE BY THE LD. AO IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5 . WE HAVE HEARD LD. DR AND PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS ORDERS PASSED BY THE REV ENUE AUTHORITIES. WE FIND FROM THE RECORDS THAT IT IS NOT DISPUTED THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN DIAMONDS AND IT IS ALSO NOT DISPUTED THAT ASSESSEE HAD MADE PURCHASES OF DIAMONDS FROM 3 I.T.A. NO. 5617, 5618 & 5853/MUM/2018 M/S IORA DIAMONDS PVT. LTD. CERTAIN PARTIES LISTE D IN EACH OF THE ASSESSMEN T ORDERS WHO HAVE BEEN FOUND TO BE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION BILLS BASED ON THE INFORMATION FURNISHED BY MAHARASHTRA SALES TAX DEPARTMENT AND IT WAS ALSO FOUND TO BE CORRECT BASED ON THE SEARCH CONDUCTED U/S 132 OF THE ACT IN THE C ASE OF B HANWARLAL JAIN GROUP, DHARMICHAND JAIN GROUP, RAJENDRA JAIN GROUP AND SANJAY CHAUDHARY GROUP. BUT, WE FIND THAT LD. AO HAD GIVEN A CATEGORICAL FINDING THAT ASSESSEE HAD MADE PURCHASES OF DIAMONDS FROM THE GREY MARKET IN ORD ER TO HAVE SOME SAVING OF TAXES AND HAD OBTAINED BOGUS BILLS FROM SOME OTHER PARTIES. WE ALSO FIND THAT LD. AO HAD GIVEN HIS CATEGORICAL FINDING THAT ASSESSEE HAD INDEED MADE SALES OF DIAMONDS OUT OF THE PURCHASES MADE FROM THE GREY MARKET. ACCORDINGLY, WE FIND THAT LD. AO WAS RIG HT IN MAKING ADDITION ONLY TO THE EXTENT OF PROFIT EMBEDDED IN SUCH PURCHASES . WE ALSO FIND THAT LD. AO HAD ADOPTED THE PROFIT PERCENTAGE OF 12.5% WHICH WAS REDUCED TO 8% BY LD. CIT(A). WE FIND THAT LD. CIT(A) HAD TAKEN A SHELTER OF THE COORDINATE BENCH DE CISON OF THIS TRIBUNAL IN THE CASE OF DHADA JEMS LTD. VRS. ITO IN ITA NO. 7310 TO 7314 DATED 19.05.17, WHEREIN THIS TRIBUNAL HAD APPLIED 4 I.T.A. NO. 5617, 5618 & 5853/MUM/2018 M/S IORA DIAMONDS PVT. LTD. THE PERCENTAGE OF 8% OF PURCHASES AMOUNT IN RESPECT OF ASSESSEE ENGAGED IN THE SIMILAR TYPE OF INDUSTRY. AGAINST THE SA ID ORDER OF LD. CIT(A), LD. DR INFORM ED THAT NO APPEAL HAS BEEN PREFERRED BY THE ASSESSEE BEFORE THIS TRIBUNAL. 6. FURTHER, WE FIND THAT THE LD. CIT(A) HAD REDUCED THE PROFIT PERCENTAGE OF 8% BY PLACING REL IANCE ON THE ORDER OF COORDINATE BENCH OF THIS TR IBUNAL, IN RESPECT OF AN ASSESSEE ENGAGED IN THE SIMILAR TYPE OF INDUSTRY AS THAT OF THE ASSESSEE. THEREFORE, IN OUR CONSIDERED OPINION , THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMI SSED. 7 . IN THE NET RESULT, ALL THE APPEAL S FILED BY THE REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH FEB 2020 . SD / - SD/ - (C. N. PRASAD ) ( M. BALAGANESH ) / JUDICIAL M EMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 10 . 02 .2020 SR.PS. DHANANJAY 5 I.T.A. NO. 5617, 5618 & 5853/MUM/2018 M/S IORA DIAMONDS PVT. LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI